How to Spot a Fake NFT Project
Non-Fungible Tokens (NFTs) are rising by the day, and more people are trooping in for its profit and royalties. But scammers lurk around to scavenge and sell fake NFTs by all means, too. Experienced traders get scammed into buying fake NFTs. So what if you’re inexperienced? It means you’re even more vulnerable.
But how can you spot when an NFT is fake or legit? Here are some factors to consider.
1. Watch Out for Fake Giveaways
While it’s not uncommon for NFT teams to announce giveaways, some bad actors also take advantage of this to scam unsuspecting victims. The purpose of any giveaway is to get more credibility for a project on social media and get people to invest in it.
But scammers don’t care about credibility. They only intend to hit as many people at a time and get away with it. They do this sometimes by announcing ridiculous giveaways, sometimes using a fake account. When you go for such promises, watch out for further cajoling into investing in a project that's not forthcoming. Or worse, that doesn’t show a solid community on Discord.
Although some giveaways are hard to let go of, be mindful of those that promise to give away than meet the eye. Scammers might ask you to connect your NFT wallet to their fake NFT. The consequence of this is often token theft. And your wallet can get swept off if you’re not swift to act. A practical example is a report by an NFT trader via the Solana Forum of a scam of $5000 on their Phantom wallet after connecting to a fake NFT giveaway account.
2. Are the Discord and Twitter Pages Active?
If you’ve been into NFTs long enough, you’d know how valuable the Discord app has been in the NFT space. Hence, the activeness of an NFT community on Discord and Twitter, plus their discussion and tweet pattern, can reveal their authenticity.
Another attribute of a legit NFT community is they keep members updated about the release date, volumes, anticipated floor price, and other essential metrics typical of NFTs on their Discord channel and Twitter account.
If the chats and discussions in an NFT Discord community are unrelated to the goal, or it's a dull atmosphere in there, take to your heels. This might be a fake. Further, you might want to check the number of participants in a team. Also, check their activity on Twitter. A dormant Twitter account with low or zero activity is a red flag.
A team with less than expected people for a particular brand might also indicate fakeness. An ideal and legit NFT Discord community commands organization. Typically, you'll see them sectioned into relevant channels. Look out for this as well.
3. Check the Sales Volume Over Time
There are many indicators here and there, but if you want to verify the credibility of an NFT, check its sales history. Of course, an NFT with low sales volume over time is likely a fake.
It simply means experienced NFT investors are probably avoiding it for some reason. Unfortunately, it’s not uncommon to see such projects on open marketplaces like Solsea and OpenSea. You can check the description of a project on the relevant marketplace or its website to get such information. That’s if it even has a verifiable web presence.
4. The NFT Website Speaks Volume
Another good source to verify the authenticity of an NFT is its website. Like other business spheres, NFTs are brands associated with companies around the internet. So a solid NFT should have a verifiable website where you can get more details about its projects and collections.
Indeed, scammers sometimes duplicate NFT websites and claim to be who they’re not. So even if you find their website, it might be fake after all. Look at the address of the website to be sure it’s secure. Then check the name critically. For instance, Moonli is different from Moonly. You can also use website checkers like DOMAINTOOLS to look up a domain’s age. If older than the listed NFT project itself, it’s probably legit.
Also, check if the website has a professional layout to include the necessary details. Scammers rarely have the time to craft a professionally outlined website. Pointers like poor user experience, vague NFT and contact information, missing Discord and Twitter links are all worth considering. Then, an NFT website without a clear About section that outlines their roadmap and plan could be pointing to a bad investment. And even if there’s a roadmap, question its reality. Ultimately, a roadmap that sounds vague, unachievable, or too promising to be true is a red flag.
5. Check the Floor Price
While it’s sometimes hard to decide based on this factor, ridiculously low or high floor prices might help point out fake NFTs.
Scammers often lower the price of their collections to make them catchy and sell high volumes, despite being fake. Moreover, if the floor price of an NFT appears to be below what it should be worth, it’s probably a fake.
Buy such NFTs, and you might have it hanging forever without finding an investor.
6. Compare the Number of Owners to the Available NFTs
Of course, an NFT project with many shareholders is a promising one. It might even have fewer NFTs in its collection. For instance, an NFT collection page that lists over 5K contributors with only 10K NFTs looks like a good one.
With that said, if an NFT collection has only one contributor, it’s probably a bad deal. Sometimes, such claim to have many NFTs. You might be at risk of a scam if you buy such NFTs.
7. Do they Have a Valid Crypto Address?
When scouting NFT marketplaces, one of the information you should look out for is a project wallet address. Most Ethereum-based marketplaces like OpenSea, Binance, Rarible, and others allow owners to feature their wallet addresses on their profiles. This varies by marketplaces and blockchain types, though.
Hence, you might want to opt out if an NFT doesn’t have their crypto wallet address listed on their profile.
And even if there’s a wallet address, you might want to look up its validity and consistency. Ethereum, for instance, lets you check the validity and transaction history on Ether wallets through a platform called Etherscan. And if you’re on the Solana blockchain, you can achieve this by scanning an address on Solana Explorer.
Solana marketplaces like Solanart also let you see the transaction history on a particular account from its stats section. Of course, high transaction volume depicts an active account you can trust.
8. Observe the Patronizing Wallet Addresses
As mentioned, you can use tools provided by various blockchains to scan an NFT owner’s address. So, in addition to tracing their transaction history, you can also see crypto wallets that transacted with them and the time they did.
However, you want to look at the crypto wallets patronizing a said NFT. If most are of an identical origin, it’s a red flag. The fake owners might be manipulating transactions by buying from themselves using a dummy crypto wallet. This deceives unsuspecting investors into thinking they have high sales volume and are credible. Whereas, that’s not true.
9. Google-Search the Image
A 2021 tweet by SOL BIG Brain narrated how scammers ended up selling 2000 pieces of fake NFT art and made off with 1000 SOL. So it’s no news that people steal NFTs and even sell them as ordinary images that you can’t use in real life. Scammers also sell copies of real NFTs as mere pictures to deceive victims.
Besides, the power of an NFT is in its uniqueness. So a duplicate is a pointer to a manipulation along the supply chain.
To see if an NFT is authentic, you can download it and upload it to Google to perform a reverse search. Note that this only applies to NFT arts, as you can’t upload other categories this way.
If you find an identical image, confirm its source. If there are copies from various sources, it may be fake.
10. Is there an NFT Description and Verifiable Social Links?
No matter how catchy, an NFT account or page with vague, poor, or no description is most likely a fake one. Sometimes, NFT scammers don’t bother describing their projects since they don’t have a goal besides swindle people.
Also, scammers tend to avoid suspicion by all means. And one way they achieve this is to avoid linking a Twitter or Discord account to their owner profile. Therefore, if you come across an NFT without proper descriptions or verifiable social links, it might be time to take off.
Signing off: Spot the Scam
Although we’ve pointed out several pointers to fake NFTs, it’s your responsibility to act on them to avoid getting scammed. The factors listed here are not exhaustive, but they’re essential factors that determine whether an NFT is legit or not. And in case you didn't know, many upcoming NFT projects keep featuring on Moonly. So you might want to join the one that interests you. Nonetheless, as mentioned earlier, be watchful and still take note of the highlighted factors to avoid getting scammed.